Spot gold jumped 1.5% to $4,418.71 per ounce by, while U.S. gold futures for December delivery gained 0.6% to $4,464.30.
There has been a bit of supportive scenario for the gold market as the dollar has been under some light pressure as of late, said David Meger, director of metals trading at High Ridge Futures.
The dollar hovered near a two-week low, making greenback-denominated gold less expensive for holders of other currencies, as traders grappled with oil prices breaking above $100 per barrel in the face of a widening war in the Middle East.
“This time, higher prices (oil) have an inflationary push but the reason, i.e. freight and supply chain disruption, is leading to higher bond rates because overall monetary policy is aimed more closely at containing inflation than it has at times been in the past,” said Rhona O’Connell, head of market analysis at Stone X.
The benchmark U.S. 10-year Treasury yields climbed to its highest level since November 2023 before easing.
Traders are awaiting U.S. producer price index data due on Thursday and consumer inflation figures on Friday for clues on whether the Fed will hike interest rates to contain prices pressures.
Market is pricing about a 60% chance of an interest rate hike at the central bank’s policy meeting next week, according to the CME FedWatch Tool.